Below Consensus Commodities, Expectations Move Our Way

Bloomberg consensus has moved in line with our own view on eurozone growth in 2018. We have long held the view for growth across the eurozone to slow this year. We project real GDP growth to ease to 2.1% this year, from 2.4% in 2017. Our forecast is now in line with that of Bloomberg consensus, which has edged lower to 2.1%, from 2.2% last month, reflecting a readjustment in overly bullish expectations earlier this year.

Consensus as measured by Bloomberg has turned less positive towards commodity prices for the first time since the start of 2018 in August, as trade tensions and concerns over their impact on physical demand for commodities are weighing on market sentiment. Our price forecasts for 2018 remain generally below consensus, in particular in the case of gold, iron ore and most agricultural commodities. Meanwhile we remain firmly above consensus for both Brent and WTI.

We are also above consensus on Saudi Arabia’s real GDP growth, after revising up our forecast to 1.9% from 1.6% previously. Consensus remains at 1.6%. Our above-consensus view is largely predicated on our expectation for a ramp up in oil production, and our Oil & Gas team’s bullish Brent crude price forecast.

Americas: Above Consensus On Peru Growth

Above Consensus On Peruvian Growth: We forecast real GDP growth of 3.9% for 2018, higher than Bloomberg consensus estimates. However, a recent upward revision to consensus growth estimates, to 3.7% from 3.5% previously, reflects some convergence in expectations. We expect Peru to see robust economic growth in the coming quarters as rising investment, particularly into the mining sector, and a favourable business environment drive economic activity (see 'Quarterly Outlook: Economy To Pick Up Despite Heightened Political Risk', June 8).

In Line With Consensus On Mexican Growth: Our 2018 real GDP forecast of 2.3% aligns with Bloomberg consensus, which was recently revised up from 2.2%. We have maintained a constructive outlook for Mexico due to projected growth in the manufacturing and services sectors (see 'Growth To Accelerate In Mexico Despite Uncertainty Around AMLO', July 5). We believe that President-elect Andrés Manuel López Obrador (AMLO)'s conciliatory stance towards the business community since his election will bolster sentiment and support investment in the months ahead of his December inauguration.

Above Consensus On Argentine Interest Rates And Inflation: We recently revised up our end-2018 interest rate forecast to 40.00%, and our 2018 average inflation forecast to 29.1%, which sit above consensus estimates of 36.05% and 27.9%, respectively (see 'Argentine Monetary Policy Mirrors Market Volatility', August 14). We expect the Banco Central de la República Argentina (BCRA) will maintain one of the tightest stances among emerging market central banks in H218, as it attempts to curtail inflation and reduce the downwards pressure on the peso.

AMERICAS - REAL GDP GROWTH AND EXCHANGE RATE

2018 Real GDP Growth, %

End 2018 Exchange Rate

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Currency

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Argentina

1.8

1.8

2.6

ARS/USD

29.3

28

24.3

Bolivia

3.7

4.1

4.1

BOB/USD

7.20

-

-

Brazil

1.6

1.8

2.5

BRL/USD

3.60

3.70

3.60

Canada

2.3

2

2.1

CAD/USD

1.23

1.29

1.26

Chile

3.5

3.3

3.3

CLP/USD

630

628

610

Colombia

2.6

2.5

2.5

COP/USD

2,910

2,890

2,840

Costa Rica

3.6

3.6

3.4

CRC/USD

575

-

-

Ecuador

1.4

1.8

1.4

-

-

-

-

Guatemala

3.1

3.4

3.4

GTQ/USD

7.55

-

-

Mexico

2.3

2.2

2.2

MXN/USD

18.4

19.7

19.1

Panama

5

5

5.5

-

-

-

Peru

3.9

3.5

3.5

PEN/USD

3.20

3.26

3.26

United States

2.7

2.9

2.8

USD/EUR

1.20

1.19

1.22

Uruguay

2.3

3

3

UYU/USD

32.0

-

-

Venezuela

-9.1

-9.2

-9.2

-

-

-

-

Source: Fitch Solutions, Bloomberg

AMERICAS - INFLATION AND INTEREST RATE

2018 Average Inflation, %

End-2018 Policy Interest Rate, %

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Argentina

29.1

27.9

26

Argentina

40.00

36.05

34.10

Bolivia

3

3.4

3.4

Bolivia

-

-

-

Brazil

3.1

3.7

3.6

Brazil

6.50

6.80

6.70

Canada

1.9

2.2

2.3

Canada

1.75

1.70

1.65

Chile

2.4

2.5

2.5

Chile

2.75

2.70

2.60

Colombia

3.4

3.3

3.3

Colombia

4.25

4.35

4.20

Costa Rica

2.5

3

3

Costa Rica

5.25

5.65

5.65

Ecuador

-0.3

0.7

0.7

Ecuador

-

-

-

Guatemala

3.9

4.6

3.8

Guatemala

3.25

-

-

Mexico

4.5

4.5

4.3

Mexico

7.75

7.80

7.80

Panama

1

1.4

1.4

Panama

-

-

-

Peru

1.5

1.8

1.8

Peru

2.75

2.70

2.70

United States

2.3

2.5

2.6

United States

2.25

2.45

2.40

Uruguay

7.8

7

7

Uruguay

-

-

-

Venezuela

225,538

7,080

7,080

Venezuela

-

-

-

Source: Fitch Solutions, Bloomberg

Asia: Less Bullish On Philippines' And South Korea's Growth

Below Consensus On The Philippine Economy: We are less bullish than consensus on the Philippine economy, forecasting real GDP growth of 6.3% in 2018, versus Bloomberg consensus of 6.7%. We believe that the economy will likely face mounting growth headwinds over the coming quarters, stemming from tightening monetary conditions and deepening trade tensions globally. These are likely to be exacerbated by the ongoing deterioration in the business environment, which will keep a lid on private investment. While the government-led investment drive is positive for the economy, which suffers from under-developed infrastructure, we question the sustainability of the government’s aggressive initiative, in the absence of larger involvement of the private sector (see 'Philippines Will Struggle To Recover Growth Momentum', August 10) .

Below Consensus On South Korean Growth: We are below consensus with regards to South Korea’s economic growth outlook, forecasting real GDP to grow by 2.7% in 2018, compared with Bloomberg consensus of 2.9%, due to three reasons. Firstly, ongoing uncertainty in the global trade environment will likely weigh on both growth in exports and capital investment as companies adopt a more cautious stance over the coming quarters. While export growth surged to 5.2% y-o-y in Q218, from 1.6% y-o-y in the previous quarter, we suspect that importers may have front-loaded imports ahead of the implementation of tariffs on Chinese goods. If this was the case, then Korean exports could weaken over the coming months, constraining growth. Secondly, weakening residential construction will weigh on overall investment growth. We believe that tightening restrictions on housing construction and sales imposed by the government will place increasing downward pressures on prices which, in turn, will dampen housing construction and investment activity. Lastly, we expect private consumption growth to remain subdued due to the country's negative employment outlook, a depreciating currency, and high household debt (see 'South Korea's Growth To Remain On A Slowing Path', July 26).

ASIA - REAL GDP GROWTH AND EXCHANGE RATE

2018 Real GDP Growth, %

End 2018 Exchange Rate

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Currency

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Australia

2.8

2.9

2.8

USD/AUD

0.75

0.74

0.75

Bangladesh

7.7

6.9

6.9

BDT/USD

86.5

-

-

China

6.7

6.6

6.5

CNY/USD

6.85

6.70

6.50

Hong Kong

4.0

3.6

3.6

HKD/USD

7.82

7.84

7.84

India

7.3

7.4

7.4

INR/USD

69.0

68.0

68.2

Indonesia

5.3

5.2

5.3

IDR/USD

14,000

14,400

14,154

Japan

1.0

1.1

1.1

JPY/USD

108

111

109

Macau

5.0

-

-

MOP/USD

7.99

-

-

Malaysia

5.8

5.5

5.5

MYR/USD

4.20

4.03

4.00

Myanmar

6.9

-

-

MMK/USD

1,389

-

-

New Zealand

2.7

2.8

2.9

USD/NZD

0.71

0.68

0.70

North Korea

5.0

-

-

KPW/USD

143

-

-

Pakistan

5.4

5.4

5.4

PKR/USD

130

-

-

Philippines

6.3

6.7

6.7

PHP/USD

54.0

53.5

53.8

Singapore

3.3

3.0

3.1

SGD/USD

1.38

1.36

1.34

South Korea

2.7

2.9

2.9

KRW/USD

1,070

1,125

1,103

Sri Lanka

4.2

4.0

4.6

LKR/USD

162

-

-

Taiwan

2.9

2.7

2.7

TWD/USD

31.5

30.8

30.3

Thailand

4.2

4.2

4.2

THB/USD

34.5

33.0

32.5

Vietnam

6.9

6.8

6.8

VND/USD

23,400

23,067

22,900

Source: Fitch Solutions, Bloomberg

ASIA - INFLATION AND INTEREST RATE

2018 Average Inflation, %

End-2018 Policy Interest Rate, %

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Australia

2.1

2.1

2.2

Australia

1.50

1.50

1.55

Bangladesh

5.8

5.8

5.8

Bangladesh

6.75

-

-

China

1.9

2.1

2.1

China

4.35

-

-

Hong Kong

1.7

2.3

2.3

Hong Kong

1.75

-

-

India

5

4.7

4.7

India

6.75

6.60

6.45

Indonesia

3.7

3.5

3.5

Indonesia

5.50

5.55

5.10

Japan

1.2

1

1

Japan

-0.10

-0.10

0.00

Macau

3

-

-

Macau

-

-

-

Malaysia

0.9

2.5

2.5

Malaysia

3.25

3.30

3.30

Myanmar

6

-

-

Myanmar

-

-

-

New Zealand

1.3

1.7

1.7

New Zealand

1.75

-

-

North Korea

-

-

-

North Korea

-

-

-

Pakistan

6

5

4.9

Pakistan

6.50

-

-

Philippines

4.4

4.6

4.4

Philippines

4.25

3.75

3.70

Singapore

0.5

0.9

0.9

Singapore

2.25

-

-

South Korea

1.7

1.7

1.8

South Korea

1.75

1.70

1.75

Sri Lanka

4.3

4.5

4.5

Sri Lanka

8.50

-

-

Taiwan

1.8

1.5

1.5

Taiwan

1.375

1.500

1.500

Thailand

1.3

1.3

1.3

Thailand

1.50

1.60

1.65

Vietnam

3.7

3.8

3.8

Vietnam

6.25

6.30

6.30

Source: Fitch Solutions, Bloomberg

Europe: Below Consensus Russian And Romanian Interest Rates

Bellow Consensus On Romania Growth And Interest Rates: Following the release of preliminary Q218 GDP data, we maintain our below-consensus outlook for economic growth in Romania. Expansion averaged 4.1% y-o-y in H118, and we expect growth to hover around similar rates in the months ahead. We forecast real GDP growth to dip to 4.2% this year, from a stellar increase of 6.9% in 2017. Bloomberg consensus expects a less pronounced slowdown, to 4.5% this year. With economic activity set to slow further, we see scope for only one more 25 basis point (bps) hike to the key rate this year, relative to consensus’ 50bps forecast increase.

Above Consensus On Ukraine Growth: We continue to project a solid rebound in economic growth in Ukraine this year, on the back of buoyant domestic consumption and rebounding export growth in light of the fading negative effect of the Donbas trade blockade. These factors will temporarily offset the impact of sluggish reform momentum. We forecast real GDP growth to reach a seven-year high of 3.4% this year, while the Bloomberg consensus estimate stands at 3.1%.

Below Consensus On Russian Interest Rates: Amid mounting uncertainty driven by the turbulent political backdrop, which in turn is likely to feed through to higher inflationary pressures, we have revised down our forecasts for Russia’s interest rates in 2018. That said, we still project some easing towards the end of this year, as the economy remains in great need of monetary stimulus given that the outlook for investment remains bleak. From the current level of 7.25%, we project the central bank’s key rate to stand at 7.00% by end-2018, while Bloomberg consensus sees it at 7.10%.

In Line With Consensus On Eurozone Growth: We have long held the view for growth across the eurozone to slow down in 2018, and relatively downbeat leading and lagging economic indicators in H118 have been reinforcing this outlook. Latest aggregate Q218 GDP figures for the bloc came in slightly better than expected, yet below 2017 rates. We project real GDP growth to ease to 2.1% this year, from 2.4% in 2017. Our forecast is now in line with that of Bloomberg consensus, which has edged lower to 2.1%, from 2.2% last month, reflecting a readjustment in overly bullish expectations earlier this year owing to a stronger-than-expected end of 2017.

EUROPE - REAL GDP GROWTH AND EXCHANGE RATE

2018 Real GDP Growth, %

End 2018 Exchange Rate

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Currency

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Austria

2.2

2.8

2.7

USD/EUR

1.20

1.18

1.19

Azerbaijan

1.7

1.8

1.8

AZN/USD

1.80

-

-

Belarus

2.5

2.6

2.6

BYR/USD

2.10

-

-

Belgium

1.6

1.7

1.7

USD/EUR

1.20

1.18

1.19

Croatia

2.7

2.7

2.8

HRK/USD

6.19

-

-

Czech Republic

3.6

3.5

3.5

CZK/EUR

25.0

25.5

25.3

Denmark

2.0

2.0

2.0

DKK/USD

6.21

6.27

6.27

Eurozone

2.1

2.1

2.2

USD/EUR

1.20

1.18

1.19

Finland

2.5

2.5

2.5

USD/EUR

1.20

1.18

1.19

France

1.9

1.9

1.9

USD/EUR

1.20

1.18

1.19

Germany

1.8

2.0

2.1

USD/EUR

1.20

1.18

1.19

Greece

1.8

2.1

2.0

USD/EUR

1.20

1.18

1.19

Hungary

4.0

3.9

3.9

HUF/EUR

314

320

320

Ireland

6.3

5.0

5.3

USD/EUR

1.20

1.18

1.19

Italy

1.2

1.2

1.3

USD/EUR

1.20

1.18

1.19

Kazakhstan

3.9

3.7

3.7

KZT/USD

334

324

324

Luxembourg

3.1

3.5

3.5

USD/EUR

1.20

1.18

1.19

Netherlands

2.4

2.7

2.7

USD/EUR

1.20

1.18

1.19

Norway

2.2

2.4

2.4

NOK/USD

7.71

7.89

7.89

Poland

4.0

4.5

4.4

PLN/EUR

4.20

4.30

4.29

Portugal

2.3

2.2

2.2

USD/EUR

1.20

1.18

1.19

Romania

4.2

4.5

4.5

RON/EUR

4.66

4.69

4.70

Russia

1.9

1.8

1.8

RUB/USD

62.0

62.0

62.4

Slovakia

3.7

3.8

3.8

USD/EUR

1.20

1.18

1.19

Spain

2.7

2.7

2.8

USD/EUR

1.20

1.18

1.19

Sweden

2.7

2.6

2.6

SEK/USD

8.33

8.64

8.51

Switzerland

2.0

2.2

2.1

CHF/USD

0.99

1.00

0.99

Turkey

5.5

4.1

4.2

TRY/USD

5.70

5.00

4.60

Ukraine

3.4

3.1

3.1

UAH/USD

29.0

29.0

29.0

United Kingdom

1.4

1.3

1.3

USD/GBP

1.39

1.33

1.35

Uzbekistan

8.8

-

-

UZS/USD

8,100

-

-

Source: Bloomberg, Fitch Solutions

EUROPE - INFLATION AND INTEREST RATE

2018 Average Inflation, %

End-2018 Policy Interest Rate, %

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Austria

2.4

2.1

2.1

Austria

0.00

0.00

0.00

Azerbaijan

5.1

4.8

4.8

Azerbaijan

9.00

-

-

Belarus

5.0

6.0

6.0

Belarus

10.00

-

-

Belgium

1.8

1.7

1.7

Belgium

0.00

0.00

0.00

Croatia

1.9

1.7

1.6

Croatia

3.00

3.00

3.00

Czech Republic

2.2

2.1

2.1

Czech Republic

1.25

1.25

1.15

Denmark

0.9

1.0

1.0

Denmark

0.00

-0.65

-0.65

Eurozone

1.8

1.7

1.6

Eurozone

0.00

0.00

0.00

Finland

1.4

1.1

1.0

Finland

0.00

0.00

0.00

France

1.8

1.9

1.8

France

0.00

0.00

0.00

Germany

1.7

1.8

1.8

Germany

0.00

0.00

0.00

Greece

1.1

0.9

0.9

Greece

0.00

0.00

0.00

Hungary

2.8

2.7

2.6

Hungary

0.90

0.90

0.90

Ireland

0.8

0.7

0.8

Ireland

0.00

0.00

0.00

Italy

1.3

1.2

1.2

Italy

0.00

0.00

0.00

Kazakhstan

6.5

6.3

6.3

Kazakhstan

9.00

-

-

Luxembourg

1.7

1.5

1.5

Luxembourg

0.00

0.00

0.00

Netherlands

1.4

1.5

1.5

Netherlands

0.00

0.00

0.00

Norway

2.1

2.2

2.1

Norway

0.75

0.75

0.75

Poland

2.1

1.9

1.9

Poland

1.50

1.50

1.50

Portugal

1.3

1.3

1.3

Portugal

0.00

0.00

0.00

Romania

4.7

4.5

4.5

Romania

2.75

2.85

2.90

Russia

2.9

2.9

2.9

Russia

7.00

7.10

7.10

Slovakia

2.1

2.3

2.3

Slovakia

0.00

0.00

0.00

Spain

1.7

1.7

1.6

Spain

0.00

0.00

0.00

Sweden

1.8

1.9

1.9

Sweden

-0.50

-0.35

-0.35

Switzerland

0.8

0.9

0.8

Switzerland

-0.75

-0.75

-0.70

Turkey

14.0

13.3

11.7

Turkey

19.00

18.30

13.55

Ukraine

11.9

11.4

11.5

Ukraine

17.50

15.55

15.55

United Kingdom

2.4

2.5

2.5

United Kingdom

0.75

0.75

0.75

Uzbekistan

13.0

-

-

Uzbekistan

14.00

-

-

Source: Bloomberg, Fitch Solutions

Middle East And North Africa: Egypt Inflation, Saudi Growth

Above Consensus On Egypt Inflation: We remain above consensus on Egyptian inflation, forecasting that it will average 15.2% in 2018, though Bloomberg consensus has moved modestly in our direction in recent months and now stands at 13.5%. After cooling notably in H118, benefiting from a more stable exchange rate regime and favourable base effects, price growth re-accelerated in recent months, with headline inflation rising from 11.4% y-o-y in May to 13.5% in July. This jump is primarily due to subsidy cuts to fuel, electricity and piped water feeding through to higher price growth (see ‘CBR To Err On The Side Of Caution’, August 1). Meanwhile we anticipate further gains in the months ahead as higher oil prices push up transport and utility costs. Indeed, our Oil & Gas team’s above-consensus view on oil prices this year - forecasting Brent to average USD75.0 per barrel (/bbl) vs consensus of USD71.0/bbl - is a large part of the reason for our own above-consensus view on inflation.

Above Consensus On Saudi Arabia Growth: We are also above consensus on Saudi Arabia’s real GDP growth, after revising up our forecast to 1.9% from 1.6% previously (see ‘Oil Production Ramp Up To Boost Saudi Economic Growth’, July 9). Consensus remains at 1.6%. While Q118 growth remained relatively subdued, coming in at 1.2% y-o-y, this was a notable acceleration from the contraction of 1.2% seen in Q417. Our above-consensus view is largely predicated on our expectation for a ramp-up in oil production, and our Oil & Gas team’s bullish Brent crude price forecast (highlighted above). Indeed, our Oil & Gas team now expects Saudi crude production will expand by 0.7% in 2018, up from 0.3% previously, and risks are skewed to the upside, as the US - Saudi Arabia’s long-standing security guarantor in the region - continues to pressure Riyadh to ramp up production to help bring down prices. Meanwhile, with oil proceeds still accounting for more than 60% of total government revenues, our expectation for higher oil prices suggests continued space for greater fiscal spending by the government. We have already seen a shift towards more expansionary fiscal policy in the 2018 budget, with cash transfers to vulnerable households, special bonuses for civil servants, and a stimulus package for the private sector including subsidised loans and financial support for distressed companies. We expect this will offer crucial economic tailwinds.

Below Consensus On Nigerian Growth: We have reduced our 2018 real GDP growth forecast for Nigeria to 2.4%, down from our previous figure of 3.2%, and are now below the Bloomberg consensus forecast of 2.6%. Our revision follows a weaker than anticipated outturn for Q118 real GDP of 2.0% y-o-y owing to weakness in the non-oil sector. We still view Nigeria as set for a gradual economic recovery, with growth likely to accelerate from 0.8% in 2017. Tailwinds will come from the oil sector, as higher prices and greater output drive export growth, which will provide capacity for the government to proceed with more fiscal stimulus in H218. However, we expect the non-oil sectors to continue lagging over the short term, with the gains from the oil sector only feeding into the broader economy gradually.

Below Consensus On Angolan Inflation: We are also below the Bloomberg consensus expectation on Angolan inflation, forecasting an average of 20.8% vs 21.8%. Inflation continued its downward trend to 19.5% y-o-y in June, down from 19.8% in May and 30.5% a year earlier. While the kwanza weakened by around 33% in the first six months of the year, the black market rate (which is more commonly used) strengthened notably, having appreciated from around AOA460/USD at the end of January to AOA375/USD at the end of June. We believe this helped to contain inflationary pressures. Indeed, while we maintain our expectation that the ongoing depreciation of the official kwanza rate will fuel some pick up in inflationary pressure over H218, a continued strengthening of the parallel exchange rate will cap price pressures.

SUB-SAHARAN AFRICA - REAL GDP GROWTH AND EXCHANGE RATE

2018 Real GDP Growth, %

End 2018 Exchange Rate

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Currency

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Angola

2.8

2.1

2.1

AOA/USD

270

-

-

Botswana

4.5

-

-

BWP/USD

10.2

-

-

Cameroon

4.8

-

-

XAF/USD

547

-

-

Congo (DRC)

3.0

-

-

CDF/USD

2,093

-

-

Congo-Brazzaville

0.4

-

-

XAF/USD

547

-

-

Côte d'Ivoire

7.1

-

-

XOF/USD

547

-

-

Equatorial Guinea

-6.7

-

-

XAF/USD

547

-

-

Ethiopia

7.5

-

-

ETB/USD

28.5

-

-

Gabon

2.2

-

-

XAF/USD

547

-

-

Ghana

7.4

7.2

7.2

GHS/USD

4.55

4.97

4.55

Kenya

5.4

5.5

5.5

KES/USD

104

104

104

Mozambique

3.6

-

-

MZN/USD

65.0

-

-

Nigeria

2.4

2.6

2.6

NGN/USD

305

365

365

South Africa

1.3

1.5

1.6

ZAR/USD

14.0

13.5

13.0

South Sudan

4.7

-

-

SSP/USD

148

-

-

Sudan

4.0

-

-

SDG/USD

18.0

-

-

Tanzania

6.6

-

-

TZS/USD

2,346

-

-

Uganda

6.2

-

-

UGX/USD

3,850

-

-

Zambia

3.9

-

-

ZMK/USD

10.2

-

-

Zimbabwe

1.9

-

-

-

1.00

-

-

Source: Bloomberg, Fitch Solutions

SUB-SAHARAN AFRICA - INFLATION AND INTEREST RATE

2018 Average Inflation, %

End-2018 Policy Interest Rate, %

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Country

Fitch Solutions

Bloomberg Consensus

Consensus Last Month

Angola

20.8

21.8

21.8

Angola

16.50

-

-

Botswana

3.7

-

-

Botswana

4.50

-

-

Cameroon

1.9

-

-

Cameroon

2.95

-

-

Congo (DRC)

28.8

-

-

Congo (DRC)

14.00

-

-

Congo-Brazzaville

2.4

-

-

Congo-Brazzaville

2.95

-

-

Côte d'Ivoire

1.8

-

-

Côte d'Ivoire

5.00

-

-

Equatorial Guinea

4.0

-

-

Equatorial Guinea

5.50

-

-

Ethiopia

13.8

-

-

Ethiopia

-

-

-

Gabon

3.0

-

-

Gabon

2.95

-

-

Ghana

10.0

9.3

9.3

Ghana

16.00

16.25

16.25

Kenya

6.4

5.1

5.5

Kenya

9.00

9.05

9.05

Mozambique

4.2

-

-

Mozambique

15.50

-

-

Nigeria

12.5

12.3

12.3

Nigeria

12.00

11.55

11.60

South Africa

4.7

4.8

4.9

South Africa

6.50

6.55

6.50

South Sudan

90.0

-

-

South Sudan

-

-

-

Sudan

50.0

-

-

Sudan

-

-

-

Tanzania

5.5

-

-

Tanzania

6.00

-

-

Uganda

3.2

3.9

3.9

Uganda

9.00

-

-

Zambia

7.5

-

-

Zambia

9.75

-

-

Zimbabwe

3.7

-

-

Zimbabwe

-

-

-

Source: Bloomberg, Fitch Solutions

Commodities: Maintaining A Below Consensus View On Commodities

Consensus as measured by Bloomberg has turned less positive towards commodity prices for the first time since the start of 2018 in August, as trade tensions and concerns over their impact on physical demand for commodities are weighing on market sentiment. Our price forecasts for 2018 remain generally below consensus, in particular in the case of gold, iron ore and most agricultural commodities. Meanwhile, we remain firmly above consensus for both Brent and WTI.

Oil: Above Consensus Since January 2018 – In August, we maintained our oil price forecast for 2018 and remain bullish on prices, expecting Brent to average USD75.0/bbl this year. We have revised up our longer-term forecast from 2019 to 2022. We are confident in our above-consensus view for prices in 2018 - we have held above-consensus price forecasts since October 2017 and this has played out well so far. However, prices will struggle to find a direction in the short term, due to uncertainty around both the impact on supply from the Iranian sanctions and escalating trade tensions between the US and China. However, a thinning global projects pipeline and the decline in global spare capacity imply higher prices ahead.

Gold: Trimming Our Forecast And Remaining Below Consensus – Gold prices will remain capped by monetary policy normalisation in the US and a strong dollar in the coming months. As a result, we have trimmed our annual average price forecasts for both 2018 (from USD1,300/oz to USD1,250/oz) and 2019 (from USD1,325/oz to USD1,300/oz). We expect a modest rebound in prices over 2019-2020, as US economic growth will slow and inflationary pressures build. We have been below consensus since Q118 and this view has played out well so far.

Metals: Above Consensus On Non-Ferrous Metals, Below Consensus On Iron Ore – We maintain our above-consensus view on copper and aluminium prices, as we believe these markets will tighten. We are also confident on our below-consensus view on iron ore prices.

Agriculture: Generally Below Consensus – We are mostly below or close to consensus regarding agricultural prices. The outlook for agricultural prices is mostly negative at this point amid a strong US dollar, concerns over trade issues and ample supply. We have recently revised down our coffee and soybean forecast and are about to revise our sugar price forecast as well. Only wheat prices are finding support amidst weather issues in Europe. We are above consensus on cotton prices, as we believe the market is tightening, which will send prices higher.